Working class individuals who work out of their homes have found it challenging previously to calculate their home office deduction for the Internal Revenue Service. In addition, the deduction is well-known for raising red-flags with the tax bureau. However, the Internal Revenue Service claims that process will be simplified and less troublesome when filing taxes next season.
Looking at a deduction for your home
The procedure of deducting a room as an office in a home is really complicated, according to the Internal Revenue Service. That is why the procedure will be made easier.
The IRS reports that 3.4 million Americans deducted home offices as part of their taxes in 2010.
The tax code section 280A states that a taxpayer can only count the room as a deduction if it is: "The principal place of business of a trade or business, as a place where you meet with patients, clients, or customers in the normal course of your business, or your work as an employee, but only if the use of the home office is for the benefit of your employer."
Simplifying the procedure
It used to be that people would spend hours filling out Form 8829 to be able to figure out how much of the home might be deducted from taxes. It was a long procedure.
In 2014, those calculations will be made easier. Working class individuals can claim $5 for every square foot of the room for up to 300 square feet, or $1,500.
Small Businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the Internal Revenue Service is happy about.
Nice to know there is change
The change has gotten a ton of good press, specifically from the National Association for the Self-Employed.
"This is terrific news for the 52 percent of all small business that work from home, who fight every day to meet their bottom lines while continuing to contribute to the economy," said Kristie Arslan, who heads the group. "The previous calculation for the deduction was cumbersome and time consuming for America's smallest business and year after year hard-earned dollars were left on the table."
The first returns to incorporate the change will be 2013 returns filed in 2014.
Looking at a deduction for your home
The procedure of deducting a room as an office in a home is really complicated, according to the Internal Revenue Service. That is why the procedure will be made easier.
The IRS reports that 3.4 million Americans deducted home offices as part of their taxes in 2010.
The tax code section 280A states that a taxpayer can only count the room as a deduction if it is: "The principal place of business of a trade or business, as a place where you meet with patients, clients, or customers in the normal course of your business, or your work as an employee, but only if the use of the home office is for the benefit of your employer."
Simplifying the procedure
It used to be that people would spend hours filling out Form 8829 to be able to figure out how much of the home might be deducted from taxes. It was a long procedure.
In 2014, those calculations will be made easier. Working class individuals can claim $5 for every square foot of the room for up to 300 square feet, or $1,500.
Small Businesses and entrepreneurs will save millions of hours in paperwork by making the change, which the Internal Revenue Service is happy about.
Nice to know there is change
The change has gotten a ton of good press, specifically from the National Association for the Self-Employed.
"This is terrific news for the 52 percent of all small business that work from home, who fight every day to meet their bottom lines while continuing to contribute to the economy," said Kristie Arslan, who heads the group. "The previous calculation for the deduction was cumbersome and time consuming for America's smallest business and year after year hard-earned dollars were left on the table."
The first returns to incorporate the change will be 2013 returns filed in 2014.
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